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Superannuation – what happens on death?

We understand that planning for the future involves making difficult yet important decisions. The death benefit information provided below is designed to support you and your beneficiaries by detailing the steps required to make a nomination, the types of nominations available, and how to renew or update them when life circumstances change.

Additionally, we offer guidance on the death benefit claims process, helping to ensure that claims are handled efficiently and with less stress during an already challenging period. 

While we all dream of retirement and look forward to the time when we can reap the rewards of a lifetime of hard work, it is important that you plan ahead to help ensure your superannuation benefit will be distributed in accordance with your wishes if you die.

In the event of your death, your benefit will be paid to your beneficiaries or to your estate in accordance with the Trust Deed and superannuation law. 

To help give certainty and help remove doubts or confusion about paying your superannuation death benefit members of the Zurich Fund have the following options for deciding how your superannuation benefit will be treated upon your death.

Binding Death Benefit Nomination – If you have a valid Binding Death Benefit Nomination in place at the time of your death, the trustee will pay your death benefit to the dependant and/ or legal personal representative (generally the executor of your will or administrator of your estate) who has been nominated by you.

A dependant includes your spouse (including same-sex and de facto), child (any age including adopted and stepchildren), financial dependant or someone who is in an interdependency relationship with you.  They must be your dependant at the time of death.

Valid binding nominations must be made on the prescribed form available by clicking here and must be accepted by the trustee before your death.  Binding death nominations expire 3 years after the nomination, renewal or amendment is signed unless they are renewed before the expiry date. 

Reversionary beneficiary – For pension products, you can nominate particular dependants who can receive your pension after your death.

A pension can be paid to your current spouse (including de facto and same sex). 

Death benefits are also able to be paid as a pension to a child only where the child is under 18, aged 18 to 24 (inclusive) and financially dependent upon you, although when the child turns 25 the balance in the Fund will have to be paid as a lump sum (tax free) to the child. If the child is permanently disabled, the pension can continue to be paid beyond age 25 and does not have to be paid as a lump sum.

  • A valid reversionary beneficiary nomination does not expire but the reversionary beneficiary must be nominated in your application for your pension product.

No nomination – If:

  • you do not have a valid Binding Death Benefit Nomination or reversionary beneficiary nomination, or
  • you have made the above nomination but:
    • your nominated beneficiary is no longer your dependant or legal personal representative; or
    • your reversionary beneficiary is no longer a dependant
  • the trustee will pay your death benefit (including the remaining pension) to your estate, unless the trustee believes that your estate is insolvent or cannot locate the legal personal representative within 6 months.

Where the trustee believes that your estate is insolvent or cannot find the legal personal representative or a person who has filed an application for grant of probate or letters of administration within 6 months, the superannuation death benefit will be paid to your spouse or, where there is no spouse and there are children, to the children (equally if more than one). 

In instances where a death benefit is paid to the estate, the trustee does not require Grant of Probate or Letters of Administration where the death benefit is less than $100,000 (this may change in the future).

As a member of the Zurich Master Superannuation Fund (the "Zurich Fund"), you can choose whether or not to make a Binding Death Benefit Nomination. Where the Trustee has consented to your Binding Death Benefit Nomination and, your benefit will be paid as a lump sum or pension (as applicable) to the person that you have nominated as long as your nomination remains valid and has been made in the required manner and the person is a dependant or a legal personal representative.

The main reason for making a Binding Death Benefit Nomination is for a greater level of certainty.  It enables you to nominate who gets what as long as it is valid on your death.  This can result in more efficient estate planning and can prevent disputes over your death benefits.

Who can you nominate?

For your Binding Death Benefit Nomination to be valid, each nominated beneficiary must be your Dependant or your Legal Personal Representative (generally the executor of your will or the administrator of your estate) as defined in our “Definitions” section.

Important: A Dependant must be alive and meet the definition of Dependant when you die. If a nominated beneficiary is not your Dependant, or your Legal Personal Representative, the portion of the benefit to be paid to that nominated beneficiary will be paid as if there is no valid Binding Death Benefit Nomination.

What happens if you don’t have a valid Binding Death Benefit Nomination?

You are under no obligation to make a Binding Death Benefit Nomination.

Where there is no valid Binding Death Benefit Nomination, the Trustee must pay the death benefit (or applicable proportion) in accordance with the trust deed provisions in force at the time of your death. Currently, this generally means that the benefit will be paid to your Legal Personal Representative, unless the Trustee:

  • is unable to identify your Legal Personal Representative within 6 months of the Trustee being notified of your death; or
  • has reason to believe your estate is insolvent

If the above apply, benefits are instead paid to your spouse or, if none, children in equal shares (where there are more than one). For example, if you have no spouse and two children, both children would receive 50%.

Note that a person is only a ‘spouse’ or a ‘child’ if the Trustee is aware of the person’s existence and is satisfied of their status as such. If there is no spouse or child, then the Trustee must pay the death benefit to your Legal Personal Representative (even if the estate is insolvent) or deal with the death benefit under applicable laws relating to unclaimed super.

What about your will?

Your will relates to the distribution of any assets that form part of your estate. Therefore, only that portion (if any) that is payable to your Legal Personal Representative (either as a nominated beneficiary or in the circumstances stated above where there is no valid Binding Death Benefit Nomination, or valid reversionary pension nomination) will fall under the direction of your will. If you have validly nominated individual beneficiaries such as your spouse or children to receive part, or all, of your superannuation monies, then this money will be paid to the individuals directly and will not form part of your estate.

This means that if you wish to change the manner in which your superannuation money will be distributed you may need to change or cancel your existing nomination by completing a new Binding Death Benefit Nomination form. It may not be sufficient to include alternate instructions in your will as this money may not form part of your estate.  You cannot change a reversionary beneficiary nomination for a pension product (which is made when you apply for that product).

How to set up a valid Binding Death Benefit Nomination?

To set up a Binding Death Benefit Nomination you must:

  • be a member of the Zurich Fund;
  • complete the Binding Death Benefit Nomination – Zurich Master Superannuation Fund form available by clicking here
  • and send the original to the address shown on the form or email a scanned copy to client.services@zurich.com.au.  

For a valid nomination to be set up:

  • the proportion of your death benefit to be paid to each beneficiary must be clearly set out (and total 100 per cent);
  • the nomination must be signed and dated by you in the presence of two witnesses, both of whom are over 18 years of age and are not nominated to receive a benefit;
  • each beneficiary you nominate must be your dependant or your legal personal representative; and
  • the Trustee must receive and consent to your nomination prior to the date of death.

Note: A nomination only applies to the death benefit payable under each particular policy you hold in the Zurich Fund. Therefore, if you hold multiple interests in the Zurich Fund, each with respect to a different policy, any subsequent nomination in respect of an interest revokes a prior nomination in respect of that interest only - which will mean you need to complete a nomination form for each policy.

Where the Trustee has consented to your Binding Death Benefit Nomination, your benefit will be paid as a lump sum to the person(s) that you have nominated as long as your nomination remains valid and effective and has been made in the prescribed manner.

For a nomination to be valid:

  • it clearly identifies the proportions in which the death benefit is to be allocated between nominated beneficiaries, if more than one (and total 100 per cent);
  • the nomination is made in writing and signed and dated by you in the presence of two witnesses, both of whom are over 18 years of age and are not named as beneficiaries in your nomination (the Trustee does not accept a nomination signed by your Power of Attorney);
  • the nomination must have been made, or confirmed within the 3 years before your death;
  • it complies with any other form and content requirements of the Trustee from time to time; and
  • you must not have revoked your nomination.

The Trustee can only consent to a nomination in respect of one or more of your dependants (as defined in superannuation law) or a legal personal representative. To remain a valid and effective nomination, a nominated beneficiary must still be a dependant or a legal personal representative at the time of death. If the Trustee has consented to your nomination and that nomination, or a part of it, is no longer valid and effective at the time of payment, the Trustee will not pay the death benefit in accordance with the nomination, or that part of it that is not valid and effective and will, instead, apply treat it as if no nomination has been made.  The process is set out in the section ‘No Nomination’.

If a nominated beneficiary is not your dependant or your legal personal representative at the date of your death, the portion of the benefit to be paid to that nominated beneficiary will be paid as if there is no valid Binding Death Benefit Nomination.

The nomination will cease to be valid and effective if you revoke it, it lapses in prescribed circumstances, or you make a new valid and effective nomination.

Details of any nomination that the Trustee has consented to will be included in your annual statement, however the validity and effectiveness of any nomination is finally determined by the Trustee at the date of death.

If you wish to make a Binding Death Benefit Nomination complete the Binding Death Benefit Nomination – Zurich Master Superannuation Fund form, available at https://www.zurich.com.au/content/dam/au-documents/personal/life-insurance/forms/binding-death-benefit-nomination-form.pdf. Or call the Zurich Customer Care team on 131 551 for a hard copy and return it to Zurich at Locked Bag 994, North Sydney 2059.   Making a Binding Death Benefit Nomination is an important part of your estate planning strategy and there could be social security or taxation implications for your potential beneficiaries. Therefore, we strongly recommend that you discuss your Binding Death Benefit Nomination with your tax adviser and financial adviser.

You must confirm your nomination every 3 years in order for it to remain valid. You can do this by:

It is your responsibility to ensure your Binding Death Benefit Nomination is confirmed before it expires.

If you wish to amend your Binding Death Benefit Nomination, you need to complete and submit a new Binding Death Benefit Nomination form which will then completely replace your previous nomination.

One restriction on Binding Death Benefit Nominations is that they are only valid for three years because of restrictions under superannuation law.  This is to ensure that your nominations stay up to date with your current circumstances. 

You must confirm your nomination every three years in order for it to remain valid. You can do this by giving us a written notice, signed and dated by you, to that effect before it expires, or simply complete the confirmation form we send to you. It is your responsibility to ensure your Binding Death Benefit Nomination is confirmed before it expires.

Important:   If, after three years, you do not make another Binding Death Benefit Nomination, or reconfirm your nomination, your original instructions will no longer be binding, and the trustee will distribute as though there is no valid Binding Death Benefit Nomination in place.

Over time your individual situation may change (e.g. you may marry, enter a de-facto relationship, have a child or someone you have nominated has died) so it’s important you ensure your Binding Death Benefit Nomination remains current at all times.

You may revoke or change your nomination at any time by completing a new Binding Death Benefit Nomination form. It will come into effect once the Trustee has consented to it and will then completely replace your previous nomination.

Instead of a Binding Death Benefit Nomination, under the Zurich Account Based Pension and Zurich Term Allocated Pension plans, you had the option to elect a reversionary beneficiary when your pension commenced. Your reversionary beneficiary needed to be a dependant (as defined in superannuation law) who was eligible to receive a pension.  You were not able to elect your legal personal representative as a reversionary pensioner.

If you elected a reversionary beneficiary, in the event of your death, the regular payments will continue to be made to the dependant you nominated as a reversionary pensioner on your original application form. and will be added to the surviving spouse’s transfer balance account if they have been nominated. Note, the value of the reversionary pension benefit will not be applied against the surviving spouse’s transfer balance account until 12 months after the death of the member. Please refer to the ATO’s website, www.ato.gov.au, for more information regarding the transfer balance account.

Only one reversionary pensioner can be nominated, who must have been nominated when your pension commenced. 

You must notify the Trustee if your nominated reversionary beneficiary ceases to be your dependant after you have submitted your application.

 A reversionary beneficiary nomination is binding on the Trustee and is irrevocable. This means that you cannot change your decision once you have nominated a reversionary beneficiary.

If your reversionary pensioner dies before you, or your reversionary pensioner is not a dependant (or in the case of a spouse, no longer your spouse) at the time of your death, your nomination will become invalid, and the money will be paid as if there is no nomination in place (as explained below).

If your reversionary pensioner is your child (or your spouse’s child), regular payments cannot continue to be made to a child aged over 18, unless the child is:

  • under 25 and financially dependent on you immediately prior to your death; or
  • permanently disabled.

If payments to the reversionary pensioner have commenced, and the reversionary pensioner subsequently dies whilst still entitled to a pension, the balance of the benefit will be paid as if the reversionary pensioner were a member taking into account their nominated beneficiaries (if any).

The only way to change your nomination is to commute your pension and then set up a new one.   Please note that as Zurich no longer offers new Zurich Account Based Pension plans, if your intention is to set up a new reversionary beneficiary nomination, it will be necessary for you to do this through another complying superannuation fund.  Making a new reversionary pensioner nomination may have taxation, social security and other implications. We recommend you discuss the appropriateness of such a nomination with your taxation adviser and financial adviser.

Important rules applying to the nomination of a reversionary beneficiary

You must notify the Trustee if your nominated reversionary beneficiary ceases to be your dependant (as defined below) while you are a member.

Any payment we make to your reversionary pensioner in the event of your death will take into account all payments already made by us to the time of the notification of your death to us. This means that any payment(s) made by us according to the terms of your Zurich Account Based Pension or Zurich Term Allocated Pension between the date of your death and the date of the notification of your death to us will not be included again in any payment we make to your reversionary beneficiary.

Please refer to one of the following Government websites: moneysmart.gov.au, apra.gov.au or ato.gov.au for tax and Social Security information related to the nomination of a reversionary beneficiary.

Where there is no Binding Death Benefit Nomination or reversionary beneficiary nomination, or a binding death nomination has been made but it is ineffective in whole or in part, , the Trustee must pay the death benefit (or applicable proportion) in accordance with the trust deed. This generally means that the benefit will be paid to your legal personal representative (which may include an executor named in your will without a grant of probate where the death benefit is less than $100,000 or such other probate limit determined by the Trustee from time to time), unless the Trustee:

  • has not identified your legal personal representative or a person who has filed an application for grant of probate or letters of administration within 6 months of the Trustee being notified of your death; or
  • is notified, by a person that the Trustee considers reasonably qualified to form the view, that your estate (excluding, for this purpose, the death benefit) is insolvent because the estate’s assets (excluding, for this purpose, the death benefit payable from the Fund) will be exhausted in meeting the estate’s liabilities.

If either of the above apply, the benefit is instead paid to your spouse or, if none, your children (including an unborn child) in equal shares (where there are more than one). Note that a person is only a ‘spouse’ or a ‘child’ if the Trustee is aware of the person’s existence and is satisfied of their status as such.

If you have no spouse or children, the benefit is paid to your legal personal representative (even if your estate is insolvent) or, if the benefit is not paid to your legal personal representative, it must be dealt with as unclaimed money under government legislation.

Dependant

A Dependant, as defined in superannuation law, includes:

  • your current spouse (including de facto spouse) of either gender;
  • your children of any age (including adopted children, stepchildren and your spouse’s children);
  • someone who is financially dependent on you; or
  • someone with whom you have an ‘interdependency relationship’.

Interdependency Relationship

Two people have an ‘interdependency relationship’ if criteria in superannuation law is satisfied and the Trustee decides that this definition is met. This includes:

  • they have a close personal relationship;
  • they live together; and
  • one or each of them provides the other with financial support; and
  • one or each of them provides the other with:
    • domestic support and personal care, but not if one of them provides domestic support and personal care to the other under an employment contract or a contract for services or on behalf of another person or organisation such as a government agency, a body corporate or a benevolent or charitable organisation; or
    • support or care of a type and quality normally provided in a close personal relationship, rather than by a mere friend or flatmate;
  • two people also have an interdependency relationship if they have a close personal relationship but they do not meet the other requirements of interdependency because:
    • either or both of them suffer from a disability including a physical, intellectual or psychiatric disability; or
    • they are temporarily living apart.

Please note, children aged 18 or more are not considered to be dependants for taxation purposes unless they satisfy the definition of dependant in the superannuation law in some other way. Depending on who you nominate there may be different taxation consequences. You should obtain taxation advice about this, having regard to your personal circumstances.

Legal personal representative

Your legal personal representative, for the purpose of any distribution of death benefits, usually means the executor of the will or administrator of the estate of a deceased person.

We understand that that when a family member or loved one passes away, it is an emotional and stressful time.  Rest assured, we aim to make the process of applying for your loved one’s superannuation, and insurance benefit (where applicable), as straight-forward as possible for you.

The steps below summarise what is required when applying for a death benefit, and what Zurich will do when assessing the claim.

Step 1:   Notification of death.

The first step is for someone to notify Zurich of the member’s passing.  This can be done either in writing in the form of a letter or email, or a telephone call from the next of kin, another family member, the member’s financial adviser or representative.   When notifying Zurich, we will require the following information:

  • The member’s name and date of birth
  • The date of their death
  • The policy number of their Zurich Master Superannuation Fund account (if known)
  • Whether the member had a valid Will (if known)

We will also need to know the notifying person’s full name, relationship to the member, postal address, and the best phone number for Zurich to contact them on. 

Important:  The notifying person will be asked a number of security questions to ensure the protection of the deceased member’s information.

After being notified of the member’s passing, you will be provided with details of your Zurich Claim Specialist, who will manage the claim from start to finish.  They will help you through the claim process and let you know of any additional information that is required.

A couple of other things to note after Zurich have been notified of the member’s death:

  • Your Zurich Claims Specialist will also suspend any current direct debit arrangements
  • Investments will continue to be invested in the same strategy as the deceased had nominated.  Your Zurich Claims Specialist will assist you with the necessary requirements if the investment strategy is to be changed prior to the claim being approved.

Step 2:    Submit a completed claim form.

Once we are informed of a member’s death, your Zurich Claim Specialist will determine whether there is a current Binding Death Benefit Nomination on file.   This will ensure the appropriate Death Claim form is sent to you for completion.

Your Zurich Claims Specialist will let you know what supporting documents are required in addition to the completed claim form.  This may include the need for certified copies of the following:

About the deceased member:
  • Death Certificate
  • Proof of identity (e.g. Passport, driver’s license)
  • The Will
  • Probate (if claim is over $100K)
  • Where the Deceased did not leave a Will - Letters of Administration (if estate nominated).
About the nominated beneficiary (as relevant)
  • Marriage Certificate where the spouse or stepchild is a nominated beneficiary.
  • If a De Facto is a nominated beneficiary, statutory declarations and other supporting documents required by the Dependant Identification Form - Binding Nomination (only if beneficiary is de facto, financial dependant or in an interdependency relationship with you)
  • Birth Certificates for each child nominated together with adoption papers for adopted children.
  • Proof of Identity for each nominated beneficiary (e.g. Birth Certificate, Passport or Driver’s License). 
Payment to the Estate

For estate payments, we need identification from at least one executor / legal personal representative.

If the claim is for $100,000 or more, we also require certified copies of Probate or Letters of Administration.

In addition to the above certified documents, we will also provide a Payment Information form, that will need to be completed by each valid beneficiary ensuring we have clear instructions where an approved claim is to be paid to.

We know the need to provide this information may be overwhelming during such a difficult time, but rest assured your Zurich Claims Specialist will work with you to ensure the claim can be finalised as smoothly as possible.

Step 3:  Claim assessment.

Once we have received the completed claim form and certified copies of the relevant documents, your Zurich Claims Specialist will assess the claim. 

Any decision about who is eligible to receive a payment will be influenced by whether the member made a Binding Death Benefit Nomination, a reversionary beneficiary nomination or if there was no valid nomination in place.

How long does it take to assess the claim and make a decision?

We aim to complete the assessment of the death benefit claim as quickly as possible once all the required documents have been received.  However, the claim assessment will take longer where:

  • There is a delay in receiving the required documents.
  • If the Binding Death Benefit Nomination on file is no longer valid.
  • If a payment to the Estate is required and the Estate is insolvent or we cannot locate the Legal Personal Representative.
  • The Trustee receives an objection to the decision.

Your Zurich Claims Specialist will provide you with regular progress updates.  And of course, you can contact them at any time you have questions or concerns about the claims process.

Step 4:   Death Benefit Payment.

Investment Component

After the death benefit claim has been assessed and the benefit processed, your Zurich Claims Specialist will notify the relevant beneficiaries or Legal Personal Representative. The benefit will then be paid according to the instructions we have received.

Insurance Component

Once the insurance claim has been approved, Zurich will notify the Trustee, who will review the claim and make a decision. Your Zurich Claims Specialist will inform the relevant beneficiaries or Legal Personal Representative via their preferred communication method that the insurance assessment is complete and has been referred to the Trustee.

Zurich will also determine if there had been any insurance premiums paid after the date of death and will include the refund of those premiums in the final payment.

After the Trustee confirms their decision, we will arrange for the insurance benefit to be paid in accordance with the instructions we have received.

Equity Trustees Superannuation Limited ABN 50 055 641 757, AFSL 229757 is the Trustee of the Zurich Master Superannuation Fund ABN 33 632 838 393, SFN 2540/969/42.

Information in this communication specific to a financial product you hold is intended to be factual only.  Unless explicitly stated otherwise, any financial product advice it may contain is intended to be general in nature only and does not take into account your personal objectives, financial situation or particular needs. You should carefully consider its appropriateness having regard to those matters

We also recommend you seek professional advice on relevant legal, taxation, social security and financial matters before making any decision based on this information. This information, including taxation matters, is based on our understanding of present law and its continuance. The Trustee reserves the right to change the terms of the relevant products including those applying to a Binding Death Benefit Nomination where permitted to do so by law.

KDEG-022273-2024